Indian IT Firms Have Many Levers To Overcome H-1B Visa Impact: Analyst

Shares of Indian IT companies have taken some knock after a bill proposing changes in the H-1B visa regime was introduced in the US last week.

Sarabjit Kour Nangra, vice president, research for pharma and IT at Angel Broking, said she feels the market’s reaction to the development on H-1B visas is “not justified”. “Actually, I am not really concerned and the fall is more sentimental than anything.”

The bill, among other things, proposes to increase the minimum salaryof H-1B visa holders to $100,000 per annum (from $60,000 per year currently) and eliminate the Master’s Degree exemption.
Speaking about the proposed changes to the H-1B programme, which allows skilled workers from countries like India to fill high tech jobs in the US, Ms Nangra said, “Instead of any harsh measures to curb outsourcing, it is just an artificial barrier or hurdle rate that has been increased for IT companies.”

She said that most of the Indian IT companies are already “paying above this threshold” to H-1B visa holders.

If the bill gets passed, the impact cannot be generalised and it depends from company to company, she said. Some analysts have forecast a hit to the margins of Indian IT companies the visa regime is changed.

“Definitely it will have impact but majority of them are paying salaries above this limit. Depends on company to company,” she said.

She also doubts whether the bill will get passed this year.

“It is premature to put IT companies under a radar and say that they will have an impact right away. I think companies have time to compensate and rectify for such impact.”

Ms Nangra believes that Indian IT companies have “levers to increase productivity” to compensate for any impact. “They have levers to do automation. I believe that they are in a position to pass on the cost also.”

“There are various levers which can compensate if it happens because arbitrage between what Indian IT services players provide and what US IT workforce functions is pretty huge,” she said.